What was the 12% question about? I agree with the .75 DPI, annual clawback, highest hurdle rate, lowest fee, etc. Was the 12% question about the IRR? I think that they said the contributions were at the beginning of the year and the distributions at the end so you had to match them up somehow.
bannisja Wrote: ------------------------------------------------------- > i put GP’s/LP’s self value for the last one but > not sure about that one. I did too for that. Isnt the valuation handled by the GP and that is a drawback to the LP.
^^^I can’t remember that question for the life of me. Relative value approaches are not appropriate for VC firms.
what numbers did you guys use to get .75 dpi? i used (distributed earnings)/(money obtained during marketing period)
bannisja Wrote: ------------------------------------------------------- > i put GP’s/LP’s self value for the last one but > not sure about that one. I thought this one was…the GP does the valuations annually or the GP hires an independent third party to do the valuations…something like this…anyone else?
CLT2- relative value approaches- was that an answer exactly or are you telling me my px multiples (which is a relative valuation approach) is right? if i went 5/6 on alts, i would feel a lot better b/c i think i went 1 or 2/6 on econ.
yeah relative valuation
Relative Valuation as in comparables. VC firms typically have no comparable companies to use as guideline companies for multiples. Yeah, replacement and real options are OK. Relative Valuation is not.
i use dist/sum of called down for dpi
Fund C better for investors because of lower carry. Fund A better for annual true up clawback…meaning money from GP is returned to investors if there is a loss.
were those the 3 choices? replacement, real options, and relative valuation? why do i remember px multiples somewhere? god i hope i chose relative valuation here then… i don’t remember but it looks good to me out of those 3. quant- what was the T stat #?
does anyone remember the choices for that relative valuation question… i think I chose that, but cannot remember the other choices
CLT2 Wrote: ------------------------------------------------------- > Relative Valuation as in comparables. VC firms > typically have no comparable companies to use as > guideline companies for multiples. > > Yeah, replacement and real options are OK. > Relative Valuation is not. I would think that relative valuation and real options. People use multiples all the time in the VC world. Replacement value would seem a lot harder since a lot of the value comes from intangibles, especially for technology firm. What is the replacement value of a young Bill Gates? not as easy as we are paying 2x projected sales for these types of businesses.
^^^True. But page 45 in the P/E book says relative value approaches are rarely apply to early stage or start up companies"
boston21 Wrote: ------------------------------------------------------- > does anyone remember the choices for that relative > valuation question… i think I chose that, but > cannot remember the other choices I believe the question was somewhere along the lines of: “Which method would be least suitable for valuing VC companies?” 1) Real Options 2) Replacement Cost (Cost Approach) 3) Multiples (Market Approach) The answer, I believe was Multiples because given VC firms are immature, they will not have any true comparable. Replacement cost is suitable for VC firms because they are new and the cost can be reliably measured. Real options are also suitable for VC firms as they have more “options” for future growth.
I think option and relative is ok. How do you put a replacement value of VC? Just looked at the CFAI text. It’s relative value and option value that you use, not replacement value. +1 for me.
-1 for me. was the last q that GP’s or LP’s report their own results or that answer?
Page 45-46 of Volume 5 of the CFAI Text states the following: Relative Value: Rarely applies to early stage or start up companies Real Option: Applies to some companies operating at the seed or start up stage Replacement cost: Applies to early (seed and start up) stage companies.
Page 45 - CFAI Volume V - Alt Invst. “Earnings Multiples - rarely applies to early stage or start-up companies” “Replacement cost - rarely applies to mature companies” +1 for me 
sebrock Wrote: ------------------------------------------------------- > I think option and relative is ok. How do you put > a replacement value of VC? > > Just looked at the CFAI text. It’s relative value > and option value that you use, not replacement > value. > > +1 for me. this was my rationale as well…how can you calculate a replacement value on a VC firm? It’s nearly impossible…too many intangibles, etc…replacement cost was the LEAST correct answer…+1 phew